With the Senate Republican healthcare bill at an
impasse, Republican leaders are weighing a proposal from
Sen. Ted Cruz to try to move it over the finish line.

Cruz's plan, which is also supported by Sen. Mike Lee of
Utah, proposes to change the type of insurance
plans that could be offered under the Better Care Reconciliation
Act (BCRA).

The plan has drawn widespread praise in conservative circles over
the past several days. But even if it brings Cruz and fellow
conservative-leaning senators on board, it may turn away more
moderate members of the caucus.

'A recipe for instability'

The
Cruz plan would allow insurers to offer plans in the
individual insurance market that do not adhere to two major
regulations imposed under the Affordable Care Act, or Obamacare,
as long as they offer one that does.

So-called essential health benefits (EHBs) require insurers
to cover 10 basic benefits, including maternity care,
mental healthcare, and emergency-room
trips. Community rating, the other mandate
under Obamacare, requires that people of the same age in a given
area be charged the same amount for premiums. That
helps people with preexisting conditions to not be charged
more for care.

Cruz has argued that the virtual repeal of those mandates
would allow insurers to offer cheaper plans to people that
want them and bring down costs for everyone.

But experts say it could mean that plans that
feature EHBs and community rating could be priced higher
than those without — to the point that they become too expensive
for the people that need them. The two tiers of plans, experts
say, could allow insurers to box sick people into the more
generous plans at a higher cost.

"Choice always sounds so good, like with the Cruz
amendment," said
Larry Levitt, a senior vice president at the Kaiser
Family Foundation, a nonpartisan health policy think tank. "But
in insurance, it's generally a recipe for instability and
discrimination."

A growing number of fans

The proposed Cruz amendment has begun to gather praise
from lawmakers and outside groups on the right flank of the
Republican Party.

For one thing, conservative holdouts in the Senate appear to be
supportive of the plan. Lee has advocated for the amendment and
has made its addition a virtual deal-breaker for his vote.

"We can’t speak for other members," a Lee aide told
Business Insider. "But we will not vote for
the Senate bill without this
change."

Other non-committal senators, such as Rand Paul of
Kentucky, have not commented on the proposal.

The traction around the amendment was enough, however, to
prompt Republican leadership to send the bill to the
Congressional Budget Office to be scored, alongside another
tweaked version of the bill without the amendment.

It may also clear a way for the Senate's bill to pass the House.
Upon the BRCA's release, reports suggested that House GOP
leadership would be open to passing the Senate's version of a
bill as it stood. But conservatives in the chamber, such as the
House Freedom Caucus, brushed back at that plan.

The Cruz amendment could change that since it
resembles amendments that won over House conservatives
during the production of the American Health Care Act, the
House's legislation, in May. According to a source close to
the Freedom Caucus, the Senate bill with a Cruz-like
amendment could garner the support of the key conservative
group.

"The group generally supports it but hasn't taken any
formal position so it'd be too soon to say if the full group
supports it," the source told Business Insider. "For example, if
pro-life protections fall off, a lot of HFC will oppose
regardless of Cruz."

Rep. Mark Meadows, the chair of the Freedom Caucus,
has expressed support for the addition.

Influential conservative groups like the Heritage
Foundation's political arm and FreedomWorks expressed
support for the idea.

"We continue to believe that the best outcome is language
modeled after the 2015 reconciliation bill that repealed much of
Obamacare," FreedomWorks President Adam Brandon said in a
statement Wednesday. "But if Senate Republicans insist on
tweaking Obamacare, we urge them to adopt language being pushed
by Sens. Cruz and Lee that will provide consumers with
more choice and truly affordable health insurance
coverage."

Heritage Action CEO Michael Needham had similar praise
in a statement.

"It is encouraging to see Senate leadership exploring the
merits of serious proposals that would inject much-needed
consumer choice and competition into an otherwise deteriorating
market," Needham said.

Victory? That's no guarantee

Cruz's plan changes the political calculus for the bill. But
so far, it's unclear if it could get Republicans the 50-vote
threshold they need to pass the legislation.

The key holdup would likely be moderates in the Republican
conference. Those that already oppose the bill, like Sen. Susan
Collins and Dean Heller, would be unlikely to come on board
since they are concerned about some of what the BCRA already
proposes to do to change certain features of Obamacare.

The amendment may also lose uncommitted GOP senators,
like Louisiana's Bill Cassidy.

Cassidy has said that any plan must adhere to
the "Kimmel Test." The barometer, named after late
night host Jimmy Kimmel, stipulates that any Republican bill
must preserve all protections for people with preexisting
conditions. Given the Cruz amendment's proposed changes, it
would likely not qualify.

While moderate GOP senators are the most important point of
opposition for Republican leaders, the proposed changes to
the insurance market that would occur under the Cruz plan drew
the ire of Democrats. Senate Minority Leader Chuck Schumer
blasted the amendment in a statement on Thursday, saying it
would raise out-of-pocket costs and harm people with
preexisting conditions.

"Make no mistake, the Cruz amendment is a hoax," Schumer's
statement said. "Under the guise of lowering premiums, it makes
healthcare more expensive because deductibles and copayments
would be so onerous that many Americans would pay much more out
of their pockets than they pay today. It’s a foolhardy trade to
exchange lower premiums for far more expensive deductibles and
copayments."

The Senate reconvenes next week after its July 4 recess, but a
vote on the healthcare bill is not expected right away.